propane project status

Report

to

Public Service Commission

on

WAPA’s LPG Project Status

Presented by: Hugo V. Hodge, Jr.

Executive Director

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WAPA’s LPG Project

WAPA’s LPG Project has become a model for the Caribbean Region. • For most Caribbean islands, converting to the use of propane as the primary

fuel source for power generation represents the best near-term option to significantly reduce the cost of fuel for power generation, while ensuring widespread economic benefits.

• We have received numerous inquiries, and requests for information, on our approach and progress regarding this conversion process, which has taken on a life of its own.

• The entire region is looking at WAPA’s project intently to see how the model can be adapted in their respective areas.

• The project will advance a number of initiatives: • Modernize existing facilities • Increase the use of efficient technologies • Make continued investments in the use of renewable energy sources

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Propane Project Status

• Throughout the process of our propane conversion, there have been complicated circumstances which were unforeseen at the time the project was launched last year. These circumstances have resulted in the need to adjust the project completion schedule. Transition to propane as the primary fuel source is scheduled to begin by the end first quarter 2015.

• Unfortunately from the early phases of the project, adverse weather conditions presented a delay, particularly for excavation on St. Croix. Also undocumented soil conditions and underground obstacles on St. Croix presented unforeseen challenges. On St. Thomas the volume of rock needed to be removed from the site was much greater than anticipated.

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• Additionally, we encountered a number of circumstances that contributed to the need for the project schedule adjustment.

– Greater challenges than anticipated for coordinating the conversion of the power plants to safely burn propane while simultaneously operating power generating facilities to meet daily electricity demand.

– Extended work required for the design, procurement and installation of the necessary resources to upgrade the Authority’s existing fire protection, controls and systems for the safe use of propane.

– The complexity of permitting, contracting, demolishing and disposing of structures with lead-based paint.

– The reality of global sourcing of all the materials and equipment for the project.

– Additional regulatory requirements to be complied with to assure the safety and the security of the marine aspect of the project, including necessary engineering and redesigns.

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Propane Project Status • Since signing the initial contract in July 2013, the project partners have

implemented an aggressive schedule to deliver the benefits of the propane conversion to the Territory as soon as possible. – The project commenced with an initial estimated project budget before

the front end engineering and design (FEED) was complete. – Following the completion of the FEED, the project leadership anticipated

the needed adjustments to the budget from $87 million to $150 million, which resulted from the improvements deemed necessary, refined design specs, unknown obstacles like the pilings and regulatory recommendations, etc.

• Although the project’s costs have increased, customer savings from the switch to propane will not be impacted. – WAPA remains committed to maintaining savings for all customers, and

fuel costs will still be reduced to the anticipated 30% due to the conversion from fuel oil to propane, along with the estimated 20% reduction in greenhouse gas emissions

– These fuel cost savings will be passed along directly to customers.

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• The increased cost of the project is being shared by the project partners, WAPA and Vitol. – Vitol is still paying all upfront costs and WAPA will now repay Vitol

according to a new amortization schedule. – WAPA and Vitol had previously agreed to an amortization period of seven

years with the option to complete payment in five years. – The amortization period has been extended to ten years, with the option

to complete payment in seven years.

• Notwithstanding the aforementioned, the projects in both Districts (St. Thomas & St. Croix) are progressing positively and have already achieved many accomplishments to include: • All demolition and earthwork completed in both districts. • Engineering, electrical, instrumentation automation, process design, civil

design, structural design, piping & mechanical design are complete. • All main contracts for the entire project scope are let. • Electrical and Mechanical contractor has mobilized and on site

performing work. • Construction of the land terminals in both districts are well underway.

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St. Thomas Project Site Before Blasting and Construction Activity


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STT Tank Mound

Construction

Control Room Construction


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Construction Activity, St. Thomas


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Vaporizer Construction, St. Thomas

Construction Activity Inside Mound, St. Thomas

Construction Activity on Control Room, St. Thomas


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St. Croix Project Site Before Construction Activity


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Control Room Construction, St. Croix

Vaporizer Construction, St. Croix


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Overview of Construction Activity,

St. Croix


• Procurement

• Source & Delivery of long lead items completed (Storage Tanks, Valves, Vaporizers, Emergency Generators, etc.).

• Equipment is coming in on daily basis with last items due in early January 2015.

• Contractor for marine works (jetty, docking facilities and the permanent mooring for the VLGC) will mobilize in January 2015.

• Fabrication of 18 propane storage tanks is complete and delivered to WAPA. 10 tanks are currently stored at the container port on St. Croix. ( 8 storage tanks earmarked for the Richmond facility was safely transported to the Estate Richmond Plant Site and positioned for permanent installation).

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Propane tanks set sail from Container Port

Propane tanks stored at STX Container Port


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8 LPG Storage Tanks Positioned for Permanent Installation on St. Croix

Propane Project Update

Storage tanks will be “mounded” - encased by layers of earth, sand, rock and gravel to maximize safety. ( 165 ft. L x 18 ft. dia. x 30 ft. H.) (Wt. 315 tons)

The benefits of mounded tanks include:

• Significant protective barrier from external damage and fire

• Elimination of oxygen, preventing uncontrolled ignition

• Additional barrier for earthquake and hurricane protection

Tank Size St. Croix (8 tanks) St. Thomas (10 tanks)

Total Storage Capacity 10,400 m3

65, 500 bbls.

14,000 m3

88,000 bbls.

Effective Supply 19.2 days

18.3 days

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Air permits for both terminals have been issued

• 20 percent reduction in greenhouse gas emissions compared to fuel oil

• Over 80 percent reduction in particulate matter (soot), Sulfur Dioxide, and Carbon Monoxide emissions.

• Propane helps to integrate renewable sources of energy into the grid.


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• Initial storm water permits for both terminals have been issued.

• St. Croix CZM Major Land and Water Permits have been approved.

• St. Thomas CZM Major Land Permit has been approved. The Major Water Permit awaits the V.I. Legislature ratification (December 2014 Session).

• On the federal water side, the U.S. Army Corps of Engineers (COE) is continuing to review our applications for both sites and is in the process of preparing to issue public notices of the projects in the coming week. We don’t foresee any obstacle that would disallow the COE from granting authorizations.

• Continue to stress importance of the project schedules and commitment associated with them, but we have no control of timing on their review and approval process.

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• Emergency Response Plans for each facility are in the process being modified & updated to reflect the use of LPG as a fuel source at our facilities.

• The Waterway Suitability Assessment (WSA) Plan, which focuses on the water side safety & security aspect of the projects, was submitted to USCG for approval.

• Stakeholders meetings sponsored the USCG were held on St. Croix and St. Thomas on October 29th and 30th , respectively to provide an overview of the WSA Plan.

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• Completed Comprehensive Fire Risk Assessment and Hazardous Area Classification Study

• Completed Phase 1 design/engineering for upgrade to the facilities fire

protection and control system.

Phase 1 includes all detectors, monitoring and control systems, hazardous area classification changes, etc.

Phase 2 includes all upgrades to the plants fire water suppression system to bring into code compliance; fire detection and foam and water suppression system for all items propane and fuel oil related, also to bring facilities into regulatory and insurance compliance; and all other API and National Fire Protection Association (NFPA) compliance upgrades.

Working VI Fire Services and other first response agencies on planning and design of fire detection and protection systems, as well as fine tuning fire and emergency response plans.

• Fire safety features planned for WAPA’s propane project will have 100% redundancy

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• VITEMA, with support from the U.S. Department of Homeland Security, is finalizing an independent vulnerability assessment study to ensure all of the local and federal mandates for safety and security are met. – Ensure that every precaution is taken to protect the wellbeing of,

not only the general public, but also the employees of the utility and the first responders who come onto the scene to manage any possible eventualities.

– Structure partnership with VIWAPA to expand communication on public awareness, as well as on safety and security measures of the projects.

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• Built and commissioned new propane delivery vessels (the Epic Curacao and Epic Caledonia) specifically to deliver liquefied propane to WAPA’s facilities.

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Propane Project Status • GE mobilized and commenced conversion works on the turbines. (1 unit

completed in each district. 1 more in process on St. Croix and another commencing in St. Thomas within the next 2 weeks).

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Sealed Turbine

Compartment

Control System

Upgrade

Control Cabinet

Gas Inlet

Compartment

propane project status

Documents

wapas project

propane project status

project leadership

project partners

project completion schedule

project schedule adjustment

wapas lpg project status

propane conversion